Values, values on the wall: Who practises, who recalls?

ON SEPT 8, Richard Cordray, director of the US Consumer Financial Protection Bureau (CFPB), announced that Wells Fargo would pay US$185 million in fines for illegally creating unauthorised deposit and credit card accounts across the United States.

The saddest thing about Wells Fargo's fraud is that no one is surprised. As the leading Israeli humourist and gestalt master Lenny Ravich once said, "99 per cent of bankers give a bad name to this profession". We would go as far as to say: many bankers nowadays are ashamed to introduce themselves as "bankers" in public presentations.

Wells Fargo's stock price dove, shaving US$24 billion from its investors. Some 5,300 employees were fired - but, surprisingly, very few senior executives. In fact, not even one senior executive has as yet taken any action that shows personal accountability; there have to date been no senior-level resignations nor any return of personal windfalls from the fraudulent activities.

On the contrary, Carrie Tolstedt, the former head of the bank's consumer banking division - the executive directly responsible for overseeing its retail banking segment, where the fake accounts were created - was rewarded for her act. Instead of being fired and denied a bonus, in July, she was allowed to retire, holding roughly US$96.6 million in various stock awards.

Wells Fargo declares in its "Vision and Values" statement: "Leaders are accountable. They share the credit and shoulder the blame. They give others the responsibility and opportunity for success."

At the US Senate Banking Committee hearing on Sept 20, Senator Elizabeth Warren grilled Wells Fargo's CEO and chairman John G Stumpf on accountability. He could not properly answer questions regarding personnel, senior leadership resignations or bonus clawbacks.

This is not the first time in the history of business that greed overpowered values. A few years ago, BP compromised on its stated first core value of safety, causing the largest, most harmful and costliest oil spill in history that brought BP almost existential risk.

The cost of not delivering on organisational values is massive; today, many organisations are teaching their values in a very inefficient manner - only from the wall, rather than through their actions.

The note on the "Vision and Values of Wells Fargo", as spelt out on the bank's website in a multi-page document, states: "We believe in values lived, not phrases memorised. If we had to choose, we'd rather have a team member who lives by our values than one who just memorises them."

Most of the company's vision and values were breached in this fiasco. It wasn't a few rotten apples but, rather, 5,300 employees who broke the code of ethics. These employees didn't do it for a day or two; they did it daily over a period of a few years.

These employees deserve to be fired because they committed criminal offences; they cheated. Regardless of core values, virtually all societies see stealing as a criminal act. But when you are a low-wage employee whose livelihood depends on reaching an unrealistic sales target, you sometimes prefer to comply, especially if and when your colleagues are all involved in a fraud that clearly is making your bosses happy; actually, you are being taken advantage of by your superiors in the organisation. It seems that not only did the leadership not provide proper training and compliance controls, it is also avoiding taking responsibility.

On Sept 24, former and present Wells Fargo employees filed a US$2.6 billion class action against the bank in Los Angeles County Superior Court. The 26-page lawsuit states: "The biggest victims of this scheme are a class of people that nobody else has talked about. The biggest victims of Wells Fargo's scam are the class of victims that were fired because they did not meet these cross-sell quotas by engaging in the fraudulent scam that would line the CEO's pockets."

Senior executives at Wells Fargo might ask themselves: "What are we doing wrong in the hiring and on-boarding process? What training and compensation models encouraged so many of our employees or colleagues to cheat on our behalf?"

Wells Fargo did not practise the value of doing what's right for customers by faking their authorisations and charging them unknowingly. Did the leadership provide sufficient training for the values and code of ethics or supervisory effective compliance? How could they expect employees to follow the values while concurrently applying relentless pressure on them to achieve unrealistic sales targets?

From a leadership perspective, cross-selling and providing one-stop-shop services for the financial needs of your customers is a legitimate goal. Yet, there must be a balance between "greed goals" that feed the stock value and practising the value of doing what's right for the customer.

If you were a CEO, would you fire two best-performing salespersons who contribute 60 per cent of your company's profits? Is it true that it is "kosher" to do anything for short-term share value growth?

In 2002, an internal investigation in Alibaba found two salespersons had engaged in bribery. Jack Ma, the company's founder and chairman, had a painful decision to make - and this at a time when money was essential for Alibaba's survival.

Mr Ma said: "If we fire them immediately, the company will not have profit. If we do not kick these two employees out, then what does this signify about us? It would imply that our words are empty. So we finally decided to let these two employees go."

He later said: "We focus on the employees and the culture. Everybody is helping each other instead of just making money."

Would Jack Ma have opted to pressure employees to meet sales quotas? He once dismissed a sales trainer for teaching malpractices. Said Mr Ma: "The training instructor was speaking about how to sell hair combs to monks. After five minutes, I got extremely angry and expelled the instructor. I thought the instructor was a cheat. Monks do not need combs in the first place."

In our work on coaching and managing by values across the world with many of the best global organisations, we continually see a crisis of "values in action". There is a growing discrepancy between the stated values on the wall and values in action. The most common current employee training methods largely reinforce values using a push strategy which relies far too heavily on memory and retention. Very few organisations actually practise what we and other like-minded value-driven consultants have been suggesting for the past 20 years. Many organisations remain fixated on the values their founders established years ago. Perhaps these values need to be updated.

A common "old" value that we see in many companies is teamwork. Is that a value or a result? IDEO, one of the world's most famous and successful design companies, chose to express teamwork instead as "we collaborate". These words have power. It is not a passive result but a dynamic action that inspires behavior that drives results.

Organisations spend billions of dollars on engagement surveys, profiling tools and tests, yet they seldom ask about the personal values of their team members. As new generations grow into the workforce, there is a need to help them connect with the core values of the organisations they serve and take ownership of them.

Millennials are looking not only for values; they want to have a greater sense of purpose and meaning at work. Learning what their personal values are helps them to connect with their employers, to scan for similarities, and to develop respect for diversity.

This checklist may help you align your culture and values with those of your employees:

Nothing much will change unless we have a radical shift in mindset. We can't expect the cat to guard the milk. There is an inherent conflict of interest in the current business model, where public companies appoint their boards and also appoint their auditors. These individuals then get paid by the company and they have a personal interest to not lose their position by going against the management of the company - when sometimes they should.

In public companies, the role of the auditor is to protect the true owners of the company: the shareholders. Perhaps every stock exchange should nominate the auditors. If the audit firms get rotated every two years, the auditors will know that they too will be audited by a new firm, and thus be much more prudent. The public companies will pay a fixed fee to the stock exchange for auditing costs. When the auditors work for the exchange to represent public interests, they will be more impartial; their duty and loyalty will be to their clients, and the audited companies will be transparent.